In 2010, the Obama administration emphasized the fundamental importance of the private sector in international development in the Presidential Policy Directive on Global Development. From this directive came the Partnership for Growth (PfG), an interagency initiative that selected four countries to develop deep partnerships with the U.S. government to help them “accelerate and sustain broad-based economic growth.” U.S. agencies including the U.S. Agency for International Development (USAID) and the Millennium Challenge Corporation (MCC) are now working with the governments of El Salvador, Ghana, the Philippines, and Tanzania to analyze constraints on their growth and create development plans that leverage private investment.

In PfG partner countries, the U.S. government’s development efforts aim to create an “enabling environment for economic growth” which will attract private capital. The government is engaging with private sector partners to determine what specific factors are keeping them from investing in the PfG countries, in order to focus its resources towards addressing those issues. The PfG aims to “spur new investment by lowering the risks and costs of investment with developmental impact,” increasing non-aid flows into developing countries and creating more sustainable development. By deliberately promoting economic growth through private investment and economic growth, U.S. agencies are positioning themselves as “catalytic minority shareholders in development” helping to unleash growth with more than official aid money.

On Friday, September 13, the Center for Strategic and International Studies held an event to promote Jeri Jensen’s new paper evaluating the successes and failures of PfG, “Toward a New Paradigm of Sustainable Development: Lessons from the Partnership for Growth.” Gayle Smith, Special Assistant to the President and Senior Director of the National Security Council, keynoted the event.

According to Smith, there is massive demand from developing countries for the U.S. government to help bring private sector investment to their economies. The government now faces the question of how to best move forward with the PfG. Smith first suggested simply adding more partner countries to the Partnership for Growth, but she admitted that the massive commitment of time and resources required to create each PfG partnership might prohibit such an undertaking. Smith then commented that there might be a way to develop a less intensive version of the PfG to be deployed more widely, although the government would have to be careful not to sacrifice the rigorous analysis and deep partnership-building which has arguably led to the success of the original PfG approach. Alternatively, the U.S. government could determine which pieces of the PfG have had the most success in partner countries and deploy only those initiatives across a wider range of countries.

Smith made it clear that the U.S. government is very committed to integrating the private sector into development efforts and helping countries resolve the problems that are keeping businesses away, as it has started to do through the PfG. As the Center for Global Prosperity’s Index of Global Philanthropy and Remittances has shown, private flows into developing countries have greatly exceeded official government aid for years. U.S. government efforts to harness the power of the private sector to increase development through initiatives like the PfG should be applauded and encouraged.

The Center for Global Prosperity is focused on educating policy leaders and the general public on the crucial role of the private sector (both non and for profit) as a source of economic growth and prosperity around the world. To accomplish this central mission, the Center produces The Index of Global Philanthropy and Remittances, which identifies the sources and amounts of private giving around the world and The Index of Philanthropic Freedom, which identifies the barriers and incentives to private giving in 64 countries.